Dana Point shaping rules for vacation rentals

DANA POINT – After years of discussions about short-term residential vacation rentals, the city may move one step closer to regulating them, instead of enforcing its current ban, when the City Council on Tuesday night looks at three programs that could shape its short-term-rental policy.

In September, the council voted 4-1, with Mayor Lara Anderson dissenting, to pursue regulations. The council recognized a problem but was concerned about taking property rights from those who use their homes for rentals.

City staff suggested a registration permit so the city could know how many properties are being used for short-term rentals. Currently the estimate is 268.

A recent city-commissioned phone survey of 400 registered Dana Point voters by consulting firm True North Research said 56 percent of respondents believed that owners should be allowed to rent out their properties for short-term vacation use, defined as less than 30 days. Thirty-two percent disagreed, and 12 percent were undecided.

The city's Planning Commission made several recommendations in 2009, including parking limitations, restricting the number of occupants in relation to the size of the unit, allowing no signs on the exterior of the property, and giving the city the ability to revoke permits if a property owner did not comply with regulations. The commission also suggested requiring that notices with the rental owner's contact information be sent to neighbors.

The council will consider Newport Beach's rental policy as an example.

According to a Dana Point staff report, Newport has 700 rental homes, charges owners a $146 permit fee and charges renters a transient-occupancy tax. The ordinance also requires that the owners leave contact information with neighbors in case of an emergency. The city collects about $1 million annually from short-term rentals, the report says.

Newport Beach also restricts short-term rental properties to neighborhoods not in homeowners associations.

Dana Point's council also will look at programs in Mammoth Lakes and Big Bear Lake.

Mammoth Lakes requires a $118 business-tax certificate and charges a transient-occupancy tax, collecting $5 million in annual revenue, or about 60 percent of the town's total revenue, the report says. The town also uses five full-time-equivalent staff members to administer the program.

Mammoth Lakes has about 2,800 short-term rental units but does not allow them in single-family zones. It has a hot line so residents can report illegal operations, the report says.

Big Bear Lake also has a 24/7 hotline for residents to register complaints. It also requires owners to leave neighbors their contact information.

The report says the cost for Dana Point to implement such a program, or combination of them, would be offset by a permit fee and transient-occupancy tax. The tax would be the same as for hotel visitors – currently 10 percent of the rate for hotel and motel rooms. The report estimates annual revenue from the program at $400,000.

"The primary consideration is protection of Dana Point neighborhoods," the report says. "If short-term vacation rentals are allowed without standards of approval and the ability to revoke permits to operate, quality-of-life cost for the neighborhood would be too high to offset any potential revenue benefits."

The report also says a decision to regulate rentals or step up enforcement of the ban would affect the city's code-enforcement division. The report recommends that the council hire a part-time code-enforcement employee to help implement any program. The new hire would cost almost $77,000 in the first year and more than $54,000 each year after that, the report says.